tpaul1

Thanks for all the posts on this subject of the company, seems like the consensus is luke warm at best. How about if a lease is the better option, what are the advantages and disadvantages of putting the house in the name of a Thai citizen child (ten years old) in trust and lease it to me? Is it even possible and if so, is it desirable? The child is my foreign business partner's daughter. I am 100% sure of his trustworthiness and his wife is as trustworthy as you can hope. If the trust were in my friend's and his wife's name until their daughter reached 18, how much control would my friend have? I understand at the age of 18, things could change but I won't worry about that yet. Also, for the payment, the money could be shown to come from my business partner from offshore if that would help, or not? Any thoughts?

is this the inline 4 cylinder or the newer single cylinder model?

The problem with a 30 year lease is that it assumes that the foreigner has in most cases put down deep roots and intends to stay there for the duration, is the way I see it. If he wants to move on, all he can do is sell an ever shortened lease to another foreigner or am I missing something? It doesn't make it attractive as an investment or very flexible if you have intentions of moving later. Please correct me if I am missing something.

On ‎10‎/‎29‎/‎2016 at 7:18 PM, LukKrueng said:

 

And the Thai partners - are they real or proxies??

 

This is indeed my original question :) At what point is Thai partner a proxy and at what point are they real? It is easy to see with your typical 'shell company' that they are proxies. But if the company is conducting a modest amount of business and the Thai partners who are also employees and receiving an income from said business have invested using borrowed money from the foreigner, are they real? Of course the company is set up for the purpose buying property (hence why the thread is in this part of the forum) but at what point are you in legally speaking safe territory when it comes to setting up such a company. To see another example, (at the risk of stereotyping forum members), if a foreigner lent his girlfriend and her friends to set up a modest fashion shop (which included land purchase) and expected the loan to be repaid with some interest would that be allowed? if the said foreigner then moved in and lived upstairs in the shop, while his g/f and partners were slaving away downstairs, would it be considered that the Thai partners were real or proxy?

On 10/27/2016 at 1:42 PM, lkn said:

The company must be majority owned by Thai citizens, so the Thai shareholders will need to provide (at least) 51% of the seed capital and will also be responsible for 51% of the debt taken on by this company, likewise, they will be entitled to 51% of the profit.

 

The profit issue is a minor consideration since the company would be making a very modest profit. The ownership and proof of invested capital seems more problematic, and I wonder how the Thai company using a mortgage against funds invested by the foreigner can be used to satisfy this requirement. Again, if we took an extreme case and 100% of funds were supplied by the foreigner, would it be viewed differently to if only 10% were provided and mortgaged placed on the chanoot?

I also understand that none of this is set in stone as it has not been tested in court as far as I am aware and as we all know a great deal of discretion is given to the local office and offer handling each case.

I suppose I am just looking for any words of wisdom or anyone who has experience doing a similar thing.

On 10/25/2016 at 6:12 PM, johng said:

1 never invest more than you are prepared to walk away from.
2 Rent.
Yes both cliches, the real estate agents will flame never mind.

yes, I am aware of that having rented for 30 years here and been very cautious. I have a successful business which I built up from nothing and I am acutely aware of the first point. However, just because one is prepared to walk away, doesn't mean that you shouldn't be as prudent as possible to reduce the risks substantially. This has been my philosophy since I started my business here and I'm definitely not of an optimistic nature when it comes to making investments.

20 minutes ago, LukKrueng said:

Basically the foreign ownership of property (land) by proxy is illegal. Seems you are "trying to invent the wheel" by dressing up the company in a different way. Many people are doing it, and have been doing it in the past, and most were never investigated and nothing happened to them. BUT - it is still illegal, and the government does check and crack down on such things from time to time. There are legal way to hold property in Thailand, such a long term (30 years) lease and life long rights to use a plot of land.

Not really, this is my point, when does a shell company not become a shell company? As I understand it, if a foreigner invests in a Thai business which is conducting business activity and requires property to conduct that business and it is a Thai majority owned business, then everything is correct providing the foreigner is holding a minority of the shares.  At the other end of the spectrum, if the company is doing no activity, then it obviously a shell company. Where do the lines blur? If the property was worth say 5M THB and was a commercial building, and the company was doing 50M THB of turnover,  would assume this would be seen as above board and legal. On the other hand, if the building were residential and being used for small scale publishing and e-commerce, how much business activity would be considered ok beforre it became a shell company? 1M, 100K 10K? If you see my point.  Most people would not pursue this method since a lot are either retirees, working offshore and don't want to complicate their lives unnecessarily by creating a legitimate business just to own a property. However, in the case I am thinking, that business activity is happening anyway, just not being directed through that address.

I know a lot has been written about Thai companies owning properties and foreigners controlling them. The main legal drawbacks seem to be:

1) The companies are not really doing any business

2) The Thai shareholders are nominees and could be investigated to see if they really invested money in the business.

Taking 1),  if an existing company (call it Company A) had a supplier who was not an official company, then would it make sense to set up a registered business (non VAT) which owned the property  (call it Business B)and then put the supplier's business through Business B? Of course, this would rely on co operation of the Company A's CEO with this plan but as it just happens that the CEO wants to live in the house, this would be easy to do. The advantage would also be that the transactions for the supplier would now go through a genuine business (Business B). Are there any disadvantages to this? If it is viable, what sort of turnover would be considered a reasonable amount to justify it as a genuine business and not a shell company on say a property worth 5 million THB? By the way, the activities passing through Business B would be entirely consistent with using such a house ( small scale printing and fabrication of textile products which could be done on a domestic sewing machine etc.)

Taking 2), how much would it take to satisfy any authorities that the shareholders were real? Do they need to see money trails and if so, how much of a loan or mortgage from the foreigner would be acceptable as a rough rule of thumb on a property worth 5 Million THB. The obvious way would be for the Thai shareholders to mortgage the property to the foreigner for the full amount or anything above what they could reasonably be accepted to pay from their own savings/income. However,  I understand this may be scrutinized at some future unknown date and cause problems. If the Business B were to pay the mortgage off out of 'profits' from its business activities, would this go some way to satisfying that everything is correct. On the face of it, to enable locals to set up a business to supply another one is not that unusual or strange and something which happens a lot.

Any other things I've missed?  Thanks for any advice

The other thing to mention is the cost factor of solar vs convention power sources, which would indicate that in the medium to long term solar and other renewables such as wind will be cheaper than some conventional sources so Thailand should adopt renewables now if they are thinking ahead to the long term (solar plants will still be generating in 100 years requiring very little investment after the installation cost is recovered so the sooner the better).  In any case, in 10-15 years from now, when the EVs are still on the road, the power mix will be in the renewable's favour more and more even if Thailand is a slow adopter of clean energy. It will come to Thailand because it will be cheaper than other sources and economics will be a bigger persuader than ethics in this part of the World; so we need to see this not as a static situation as of today but longer term.  A good article here about the subject ( talking about the US but still relevant)

http://solarcellcentral.com/cost_page.html

Of course electricity can be generated greenly. There is more than enough sunlight in one day to generate a year's consumption. It is about political and society's will and priorities. For a few days this year Portugal's electricity was completely carbon neutral and many other countries are massively reducing their use of no renewables and pledged to be carbon neutral such as Norway, Denmark, Sweden, even Costa Rica. https://en.wikipedia.org/wiki/Carbon_neutrality

it doesn't 'matter' but as usual the Trumps don't need to be held in the same scrutiny as previous nominies. A husband of HRC 's aid does sexting and it is a major scandal. Such a lot of hypocracy and double standards

beside the visa issue, maybe I am old fashioned but doesn't it bother anyone having a first 'lady' that was an ex nude model? I mean ok for your gig but not really ideal for international diplomacy.

9 minutes ago, helpisgood said:

And once again, big media ignores the third party candidates even though the major parties have nominated the two most disliked candidates in, at least, modern history.

 

Yes, I know it's because their polling is low, but there's the catch-22.  If they don't get invited to such forums, then they don't get the chance to significantly increase their numbers.  

 

The third party candidates, even if one decides not to vote for any of them, would make statements that better question what Trump and Clinton are saying.  You wouldn't have to rely as much on Matt Lauer or whomever. 

Are you talking about Gary Johnson who hasn't even heard of Eleppo?

http://www.nytimes.com/2016/09/09/us/politics/gary-johnson-aleppo.html?_r=0

It is just another clear example of capitalism not being the long term model for humanity. Short sighted and uncaring as long as the bottom line is ok, regardless of the waste in energy and resources and the long term consequences for the planet. It is all about price and not about value. Destroy the atmosphere with your carbon or destroy the forests of Laos with HEP. Take your pick but it is shameful. The World needs a new model for development and  a leader to take us there.

Never mind the waste of money, that just goes around and used elsewhere in the economy. What is FAR more important is the CO2 emissions. Time is running out fast for the planet and everywhere needs to address this issue with utmost urgency. Reading about this on 350.org last night caused a very restless sleep. Deeply troubling. Burning just the fossil fuels that are already planned to be burned will cause the planet's temperature to increase 4-6 degrees in the coming decade or so. BKK traffic is not going to solve that by itself but a huge societal change is needed  everywhere away from private car useage.

It can be very depressing with the rubbish situation here in Thailand because the effect is cumulative and after 25 years of observation, I have only seen an acceleration level of plastic discarded in this part of Thailand. Iwant to feel optimistic but instead get quite depressed. When riding a bicycle, especially in the dry season it is painfully obvious when the vegetation has died back the verges are completely covered in plastic of all descriptions and as others have said, Ban Chang beaches are in a dreadful state. See photos of the beach at U Tapao taken recently. The problem is that Thailand has very bad timing when it comes to development and rubbish control.

At the time the UK was developing and its citizens was throwing their rubbish around the countryside it was mostly paper, wood, tin cans, ceramics and some glass. The trouble is, in Thailand it is mostly plastic which is unnatural and potentially very damaging to the ecosystem and almost impossible to remove once it has been broken down into smaller pieces or incorporated with the soil etc. The few countries left in the World which have not reached the stage of having convenience stores and a population with budgets to buy plastic, but no sense of responsibility to dispose of it, when they get to that stage in the future will most likely be throwing 'smart plastics' away and hopefully avoid such detrimental contamination. This leaves countries such as Thailand, Indonesia and China (worst offenders for discharge of plastic in the sea by the way), as having the hardest job clearing up this mess in the future after they get to the point where they take their environment seriously. Alas, by then the damage is done.

The photos below are mostly of rubbish swept in from the sea but nearly all were local brand containers so presumably, one way or the other originated from Thailand and were purchased and disposed of in the kingdom and surrounding seas. By contrast, I visited very secluded parts of the shoreline in Wales recently which would have had no clean up crews and there was very little evidence of any seaborne plastic.